Phoenix Financial Ltd · TASE:PHOE
Phoenix Financial — Q1 2023 Earnings Presentation
45 slides from Phoenix Financial's earnings presentation, 2023
Slide 1: 2023 Q1 Phoenix Holdings Financial Review
2023 Q1 Phoenix Holdings Financial Review
Slide 2: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer |2
Slide 3: Phoenix Holdings - Overview
Phoenix Holdings - Overview Group Activities Highlights Insurance Asset Distribution Credit Leading Israeli TA-35 10.3 NISb Management financials group Leading index Market cap 1 Distinctive 20% 15% P&C Pensions Agencies SME (Gama) performance AUM CAGR ROE Health Mutual Funds Brokers Real Estate 5-y
Slide 4: Economic Snapshot
Economic Snapshot Continued capital GDP Growth 2 GDP per Capita 3 Long-Term Savings AUM 4 market volatility, with Percent USD ‘000 NIS Trillion Israeli market Q1 8.6% underperformance 6.5% Sweden 57 9% CAGR (improvement in Q2 4.1 4.2% Israel 55 2.5% 2.5% 2.4 2.3 to date) 1.9 2.0 Germany 49 1.6 Relat
Slide 5: Q1 2023 Highlights
Q1 2023 Highlights 81 3.3 386 Continued growth in income from core businesses to 301 NISm % NISb NISm, with 34% growth YOY and 12.4% normalized ROE Comprehensive Income ROE AUM However, negative net capital market impact of 208 NISm in Q1, primarily due to Israeli markets Increase in solvency ratio
Slide 6: Growth in Core Business
Growth in Core Business Insurance Additional Investments Special Special Items: Core Core & Interest Items: Additional Core Business Business Rates Insurance Business Comprehensive Income 2,316 NISm, after tax 141 265 Continued growth Comprehensive Income – Q1 in core businesses (34% YOY) NISm, afte
Slide 7: Investment Core Capabilities
Investment Core Capabilities Returns - Insurance Nostro / Corporate Account Asset Allocation - Corporate Account (Nostro) Percent (nominal) Percent (March 31, 2023) 10.6% Cash Alternatives & other 3% 13% 7.4% 5.6% Real estate 4.8% 12% Fixed income (Govt) 34% 3.2% ~70% fixed 1.9% 1.9% Equities 5% inc
Slide 8: Equity Generation and Dividend Distribution
Equity Generation and Dividend Distribution Shareholders' Equity NISm 177 NISm dividend distributed April 2023, as part of dividend policy of at least 30% 10,145 9,967 9,653 of annual comprehensive income 7,970 After 100 NISm 2023 buyback program 6,446 6,636 dividend at announced, of which 6 NISm ex
Slide 9: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer |9
Slide 10: Value Creation Strategy & Catalysts
Value Creation Strategy & Catalysts Value Drivers Growth Engines 1 2 3 4 Insurance Accelerated Innovation & Active Capital Growth Efficiency Management Management Accelerating growth Deepening client-focus Optimizing group Deploying capital Asset Management while shifting mix to & sustainable portfo
Slide 11: Group Targets
Group Targets Insurance Asset Management Distribution Credit Comprehensive Income Income from Additional Core Businesses NISb Without special items, after tax, NISm 2.3 650-700 1.4 1.3-1.5 Shifting group mix 1.1 390 314 toward 50% stable, 271 fee-based income 100 0.1 2020 2021 2022 Q1/23 mid- 2020 2
Slide 12: 1. Insurance | Continued Growth
1. Insurance | Continued Growth Insurance Asset Management Distribution Credit Premiums & Contributions NISb 19.7 19.1 +12% CAGR* 7.3 14.5 7.8 3.2 12.4 Growth in strategic target P&C, 12.1 11.3 with lower savings policy inflows 2.0 1.9 due to market conditions 1.6 5.6 5.2 5.4 5.1 4.8 5.1 5.9 3.1 4.4
Slide 13: 1. Insurance | Targets
1. Insurance | Targets Insurance Asset Management Distribution Credit P&C Expense Ratios2 Premiums, including Smart direct, NISb P&C Health Life % of premiums % of AUM 4.5 2019 4.10% 5.57% 0.50% 3.7 3.2 2020 5.08% 5.82% 0.49% 2.9 2021 4.40% 5.50% 0.41% 2022 3.53% 5.00% 0.40% 1.0 1.2 Q1/22 3.85% 5.39
Slide 14: 2. Asset Management | AUM Growth
2. Asset Management | AUM Growth Insurance Asset Management Distribution Credit Assets Under Management NISb 386 369 371 112 Provident 117 111 Asset Management 234 (off balance 215 73 Pension sheet) 53 67 35 178 34 37 30 31 70 66 72 Investment Services 24 56 52 45 97 95 95 Insurance and Savings Poli
Slide 15: 2. Asset Management | Targets
2. Asset Management | Targets Insurance Asset Management Distribution Credit Group AUMs Pension & Provident Contributions Investment Services Revenues Expense Ratio: Pension & Provident NISb NISb NISm % of AUM 450-550 19.0 750 44 666 2019 0.24% 369 371 386 296 2020 0.16% 13.1 463 502 252 10.8 234 20
Slide 16: 3. Distribution (Agencies) | Stand-Alone Value
3. Distribution (Agencies) | Insurance Asset Management Distribution Credit Stand-Alone Value Agency Revenues 79.4% 20.6% Phoenix Holdings Management Assessing NISm options to 950 bring investor Phoenix Agencies to Phoenix 770 Agencies to 635 unlock & Agam Shekel Oren Mizrach Quality Others create v
Slide 17: 4. Credit | Building Group Activities
4. Credit | Building Group Activities Insurance Asset Management Distribution Credit Group Credit Activities Reporting Segments NISb 5.3 5.1 0.2 Other 0.2 Investment > Private client brokerage margin & shareholder loans 0.6 Investment House 0.6 Services > Under Phoenix Investment House 3.0 2.2 2.4 R
Slide 18: Resilience, Growth & Value
Looking Ahead Resilience, Well positioned for continued volatility in 2023, with strong Ongoing strategic execution Assessing strategic Growth balance sheet & liquidity & unlocking of value opportunities & Value Creation Investment in capabilities, including digital transformation / Continued strate
Slide 19: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 19
Slide 20: Q1 2023 Income by Segment
Q1 2023 Income by Segment Comprehensive income before tax Q1 2023, NISm (77) 150 (6) 28 (27) (24) 81 (183) 73 76 51 20 P&C Health Life Other Equity Pension and Investment Agencies Credit Other Tax Miniority 1-3/23 Returns Provident Services +71 Asset Management -34 +166 Insurance Additional core bus
Slide 21: Q1 2023 Income by Source
Q1 2023 Income by Source P&C Agencies Health Credit Comprehensive income before tax Life Other Q1 2023, NISm Other Equity Returns Pension and provident Investment Services 28 6- 15 7 -54 66 304 57 -139 24 112 150 36 18 132 47 -292 Tax 106 -24 81 109 4- 26 24 27 Miniority -467 Insurance Pension and I
Slide 22: Strong Balance Sheet
Strong Balance Sheet Balance Sheet Phoenix Holdings NISm 31/12/2022 31/03/2022 31/03/2023 Difference Cash 3,282 3,380 2,426 -856 Intangible Assets 2,992 2,823 3,061 69 Deferred acquisition costs 2,453 2,156 2,594 141 Investments in associates 1,594 1,318 1,618 24 Investment property - other 1,148 1,
Slide 23: Active Solvency & Capital Management
Active Solvency & Capital Management Economic Capital / Solvency (Insurance Company) Solvency II implementation Cashflow and Liquidity (Holding Company) > Solvency II implemented in Israel in line with international Solvency ratio1 > Phoenix Insurance dividend standards, with strong regulatory overs
Slide 24: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 24
Slide 25: P&C 20% growth in premiums
P&C P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other 20% growth in Underwriting 2022 Q1/22 Q1/23 Comprehensive Income Before Tax Profit premiums NISm Compulsory Motor 161 9 31 Improved underwriting Motor Property (182) (61) (6) profit in challenging Loss Ratio
Slide 26: Health
Health P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Lower underwriting profit, Comprehensive Income Before Tax mainly due to long-term care NISm (7) Income from release of LAT reserves due to higher interest rates, however smaller effect compared to Q1/22;
Slide 27: Life and Savings
Life and Savings P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Growth in underwriting Comprehensive Income Before Tax profit NISm Negative capital market impact including variable management fee deficit of 637 47 NISm as of report publication date, with low
Slide 28: Other Equity Returns (Insurance)
Other Equity Returns (Insurance) P&C Health Life Other Pension Investment Agencies Credit Other EquityProvident Services Comprehensive Income Before Tax NISm 109 (292) (183) Financial Investments Special Items 1-3/23 Margin above 3% Q12022 93 (371) - (278) Difference 16 79 - 95 | 28
Slide 29: Asset Management | Pension & Provident
Asset Management | Pension & Provident P&C Health Life Other Pension Investment Agencies Credit Equity Provident Services Other Continued organic Comprehensive Income Before Tax growth NISm Stability in profit from operations, which includes (4) management fees from pension & provident funds 24 20 P
Slide 30: Asset Management | Investment Services
Asset Management | Investment Services P&C Health Life Other PensionInvestment Agencies Credit Equity Provident Services Other Performance improvement from strategic Comprehensive Income Before Tax execution NISm Higher brokerage contribution due to growth and margin 6 (6) 51 3 Completed acquisition
Slide 31: Agencies
Agencies P&C Health Life Other Pension InvestmentAgencies Credit Equity Provident Services Other Stable income with Comprehensive Income Before Tax organic growth in NISm business, lower one-time 0 fees/commissions relating 7 to new policies (due to slower pace of hiring in the market) Implementatio
Slide 32: Credit (Gama only)
Credit (Gama only) P&C Health Life Other Pension Investment Agencies Credit Other Equity Provident Services Significantly improved profit from Credit Portfolio Comprehensive Income Before Tax operations, with continued growth in net NISm, without credit card activity NISm income over past three quar
Slide 33: Other
Other P&C Health Life Other Pension Investment Agencies Credit Other Equity Provident Services Segment includes Comprehensive Income Before Tax Phoenix Holdings NISm solo profits (including RT1 holding) as well (1) as other items 3 (8) (6) Financial Subsidiaries Other Special Items 1-3/23 Margin Q12
Slide 34: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 34
Slide 35: Phoenix Holdings – Highlights
Phoenix Holdings – Highlights Unique opportunity in a growing, underpenetrated market with barriers to entry 1 Strong demographic & wealth trends with high compulsory savings rates & potential for greater penetration, macro resilience during 2020-22 Strong market position with distinctive growth & p
Slide 36: Competitive Landscape
Competitive Landscape Comprehensive Income AUM P&C Market Share NISm, attributed to shareholders NISb, 2022 %GWP, all sub-segments, 2022 ROE Phoenix 371 Others Harel Phoenix 1,124 11.0% Migdal 368 Wesure 9.8% 16.5% 7.2% 5.5% Menora 410 Harel 363 Shlomo 6.6% 2022 Harel -77 (0.9%) Clal 295 13.9% Yashi
Slide 37: Strategy Execution | Examples 2020-22
Strategy Execution | Examples 2020-22 Value Drivers 1 2 3 4 Accelerated Growth Innovation & Active Management Capital Management Efficiency Growth Engines Insurance > P&C > Data & machine learning > Divest control Ad-120 > Solvency & capital > Travel > Products / apps > Option plan optimization > Sa
Slide 38: 2. Asset Management | Full Range of Solutions
2. Asset Management | Insurance Asset Management Distribution Credit Full Range of Solutions ETFs & Active Mutual Discretionary Brokerage Alternative Pension Provident Executive Private Savings Passive Funds Funds Portfolios Accounts Investments Funds Funds Insurance Policies Market Broad set of Pri
Slide 39: Sustainability | ESG Overview
Sustainability | ESG Overview Long-term strategic plan with Rating agencies multi-year workplan Engaged global & local ranking and rating agencies such as S&P, Maala & Greeneye to learn about ranking methodology and agencies’ expectations 2023 Long term The Phoenix is the first and only Israeli insu
Slide 40: Sustainability | Highlights & Examples
Sustainability | Highlights & Examples Group Products & Services Investments Overall Integrating ESG & ESG ratings 10+ sustainable 100% approach local and global active products & services of portfolio covered by engagement ESG responsible investment policy Environment Enable & support 20% #1 EV ins
Slide 41: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 41
Slide 42: Glossary
Glossary AM Asset Management; i.e. Excellence Nessuah AUM Assets Under Management; the total market value of all the investments that are managed by the Group Bps Basis Points; 1 basis points is .01% CGU Cost Generating Unit CI Comprehensive Income CLR Combined Loss Ratio CO Corporate, Other and Con
Slide 43: Glossary
Glossary MF Management Fees; wages charged by a financial manager Moody’s A credit risk rating agency MSCI Morgan Stanley Capital International Emerging Markets Index; measures the performance in equity markets, specifically in global emerging markets Mutual Fund Open end, non-tradable basket of sec
Slide 44: Agenda
1. Highlights 2. Strategy & Targets 3. Financial Results Agenda 4. Segment Breakdown Appendix Glossary Disclaimer | 44
Slide 45: Disclaimer
Disclaimer This presentation does not constitute an offer to purchase the Company’s securities or solicitation to receive such offers and is designed solely to offer information as part of the Company’s explanations regarding its Q1 2023 Financial Statements. This presentation includes information r